7.21.2 Processing User Fees

Manual Transmittal

July 18, 2018

Purpose

(1) This transmits revised IRM 7.21.2, Exempt Organizations Determinations Processing, User Fees.

Material Changes

(1) Incorporated Internal Guidance Memorandum TEGE-07-0218-0008, Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code.

(2) Updated instructions in IRM 7.21.2.6, User Fee Indicators.

(3) Added IRM Sections 7.21.2.6.1, Duplicate Flag Error in TEDS, and 7.21.2.7, Updating Entity Information in LINUS.

(4) Made editorial changes throughout the IRM.

(5) Added new program, scope, and objectives content at IRM 7.21.2.1, as per IRM 1.11.2.2.5.

(6) Edited the document for plain language, as required per the Plain Writing Act of 2010.

Effect on Other Documents

This supersedes IRM 7.21.2 dated September 21, 2015.

Audience

Tax Exempt and Government Entities
Exempt Organizations
Rulings and Agreements

Effective Date

(07-18-2018)

Margaret Von Lienen
Director, Exempt Organizations
Tax Exempt and Government Entities

Program, Scope, and Objectives

  1. Purpose: This IRM lists instructions for processing and maintaining records of user fees sent to Exempt Organizations (EO) Determinations and handling user fee refund requests for EO and Employee Plans (EP).

  2. Audience: The procedures in this IRM apply to employees in the EO Rulings and Agreements (R&A), Processing and Support, Adjustments Unit.

  3. Policy Owner: Director, Exempt Organizations.

  4. Program Owner: Exempt Organizations.

Background

  1. Rev. Proc. 2018-4 and Rev. Proc. 2018-5 (both updated annually) provide information about user fees for EP and EO determination letter requests and EP letter ruling requests. The EO R&A Processing and Support Unit maintains a user fee processing area to handle user fees. User fees are recorded, tracked, and reported in the Letter Information Network User-Fee System (LINUS).

Authority

  1. Rev. Procs. 2018-4 and 2018-5 (both updated annually) provide background information, administrative procedures, and user fee amounts for determination letter requests in EP and EO and letter ruling requests in EP.

Responsibilities

  1. The EO R&A, Processing and Support, Adjustments Unit is responsible for processing and maintaining user fees and protecting payments in its custody against loss, theft, fire, destruction, and alteration.

Program Controls

  1. The EO R&A, Processing and Support, Adjustments Unit manager reviews the work performed in this IRM.

Acronyms

  1. This manual uses the following acronyms:

    Acronym Definition
    AIS Application Identification Sheet
    CSPC Cincinnati Submission Processing Center
    DLN Document Locator Number
    EDS EP/EO Determination System
    EIN Employer Identification Number
    EO Exempt Organizations
    EP Employee Plans
    IDRS Integrated Data Retrieval System
    LINUS Letter, Information, and Network User-Fee System
    POA Power of Attorney
    TEDS Tax Exempt Determination System
    TRAC TE/GE Rulings and Agreements Control

User Fee Payments

  1. The Cincinnati Submission Processing Center (CSPC) is responsible for processing user fees submitted with Exempt Organizations (EO) and Employee Plans (EP) determination letter requests. See IRM 3.45.1, Processing Employee Plan and Exempt Organization Determination Applications and User Fees.

  2. Locations other than CSPC occasionally receive user fees checks. The receiving location completes certain actions before sending the payment to CSPC for deposit.

  3. EO R&A, Processing and Support Section maintains a locked area with controlled access for user fee payments it receives.

  4. To process a user fee check:

    • Make sure the check is complete and payable to United States Treasury (or a variation).

    • Stamp United States Treasury on the check if the payee line on the check or money order is blank or incomplete.

    • Contact your manager if you believe the check or money order should be returned to the submitter.

      Example:

      The check or money order is not filled out completely; the organization submitted Form 8940 but is automatically revoked; or the organization and POA both submitted checks for the same case, etc.

  5. Endorse the check using CSPC endorsement.

  6. Print the Application Identification Sheet (AIS) for a Tax Exempt Determinations System (TEDS) case.

  7. For an EO hard copy case, prepare a user fee page/form based on the type of request, write the payment amount in red ink, and initial the form using:

    Request Form User Fee Page/Form
    Form 1023 Page 11
    Form 1024 Form 8718
    Form 1024-A Form 8718
    Form 8940 Form 8940
    Letter Request Form 8718
  8. Complete Form 14267, User Fee Check Transmittal Form, including:

    • Organizations’ names or plan sponsors

    • Employer Identification Numbers (EIN)

    • Check numbers

    • Money amounts

    • Postmark dates

    • Received dates

  9. Send the following to CSPC:

    • Form 14267

    • Checks

    • User fee pages/forms

    • AIS (if applicable)

    • Applications for scanning into TEDS (if applicable)

  10. CSPC updates LINUS and deposits the check.

Non-Remits & Incomplete User Fees

  1. An application without a user fee or with an incomplete user fee is returned to the submitter as incomplete. The applicant must resubmit the request in its entirety if it wants the IRS to consider the request.

    Note:

    An application returned as incomplete is entered into LINUS but isn’t scanned into TEDS.

Dishonored Checks

  1. The Accounting Branch at CSPC:

    • Contacts EO R&A, Processing and Support when a user fee check is dishonored.

    • Sends a copy of the dishonored check to the Adjustments Unit with a transmittal indicating the name and/or Document Locator Number (DLN) of the case.

  2. To process the dishonored payment:

    1. Cross reference the DLN/name on LINUS to get the correct EIN.

    2. Write the EIN on the bottom of the check.

    3. In LINUS Refund, click on the correct DLN.

    4. Select Dishonored Check from the drop-down options.

    5. Select Request User Fee Payment with Letter.

    6. Enter DISHONOR DATE and CHECK NUMBER at prompts.

    7. Select SPLIT, SAVE, then CLOSE.

    8. For a hard copy (EDS) case, zero out the user fee field and update the Dishonored Check field to "Y." LINUS automatically updates the dishonored check field for TEDS cases.

      Caution:

      If TEDS owns the case, don’t update the case in EDS (which puts an EDS Block on the case and the case can’t be worked in TEDS).

  3. If the case is assigned, email the assigned employee (Determinations specialist or tax examiner) about the payment on the day of or the next day of CSPC notice (to prevent approval of case). The assigned employee either:

    1. Notifies the organization of the dishonored payment and solicits the appropriate payment (other than Form 1023-EZ).

    2. Returns the application as not accepted (Form 1023-EZ).

Money Transfers and Moving User Fees

  1. If a Determinations specialist (or an organization itself) discovers that a user fee payment isn’t correctly recorded in LINUS, he/she notifies the Adjustments Unit.

  2. If a submitted user fee payment isn’t recorded on LINUS but posted in IDRS, the payment must be sent as a money transfer from IDRS to LINUS.

  3. A Determinations specialist makes sure EDS reflects the correct user fee payment with the correct form submission. This may involve moving a user fee from one form to another.

    Example:

    An organization submits Form 1023 and then submits Form 1024, changing its requested subsection, because it didn’t meet the requirements of IRC 501(c)(3). The specialist must ask Adjustments to move the user fee from Form 1023 to Form 1024 in EDS.

Money Transfers

  1. Research IDRS for information needed to complete a money transfer using the following command codes:

    • INOLES to get the name and address of the organization

    • BMFOLI to see if the payment posted

      Note:

      BMFOLI also provides the MFT Code, Tax Period, and the Plan Number (EP) needed to complete Form 2424, Account Adjustment Voucher.

    • BMFOLT to get the Transfer Code and Date

    • TXMODA to get the Trace Number

      Note:

      If the information is not available on TXMODA, complete a MFREQC first.

  2. Complete Form 2424 for the money transfer entering:

    • Name

    • Address

    • EIN

    • Tax period

    • Transaction date

    • MFT code

    • Debit and/or credit amounts

    • Trace ID number (Explanation)

    • Split fees to Treasury and IRS (Explanation)

    • Preparer’s name and date

    Note:

    CSPC will execute the money transfer.

  3. Complete Form 3210, Document Transmittal, listing the names and EINs of the organizations requiring a money transfer.

  4. Forward the following to the Accounting Branch at CSPC:

    • Form 3210

    • Form 2424

    • IDRS and LINUS research

    Note:

    Keep a copy of Form 2424 in a tickler file and a copy for case processing in TEDS.

  5. Send the application to CSPC for case processing in TEDS:

    1. Pull the application (or other determination request) file.

    2. Complete Form 3210 with instructions to process the request in LINUS as a no-remit and the type of request to establish in TEDS (e.g., initial application, amendment case, etc.).

    3. Send the application (or other request), copy of Form 2424, and Form 3210 to CSPC.

  6. Review the tickler file weekly to ensure the case is processed in TEDS and the user fee posted to LINUS.

  7. Notify your manager if these actions don’t occur within two weeks of submitting Form 2424.

Moving User Fees

  1. When a Determinations specialist (or other employee) notifies Adjustments to move a user fee from one case to another:

    1. In EDS, enter option (4) Update Status, Master Record or Closing Data on the UPDATE MASTER RECORD - EXEMPT ORGANIZATION screen.

    2. Enter a case identifier to access the case EDS data and hit F1.

    3. Zero out the User Fee amount on the "moving from" case and enter the user fee amount paid on the "moving to" case.

    4. If updating based on an email, send a reply email to the submitter that the information was updated.

    5. Flag the original email in the Adjustments Unit’s mailbox as complete (if applicable).

      Caution:

      Don’t move a user fee in EDS until the case is owned by EDS.

      Note:

      You can move a user fee on a closed case.

User Fee Refunds

  1. EO and EP refunds user fees if they are overpaid or refundable per Rev. Proc. 2018-4 and 2018-5 (both updated annually).

  2. The Adjustments Unit inputs user fee refund requests from both EO and EP.

  3. Beckley Finance Center processes user fee refunds. The Kansas City Campus generates and mails the checks.

EO User Fee Refunds

  1. EO Determinations specialists and tax examiners initiate:

    • A partial user fee refund when an organization overpays a user fee amount

    • A full refund because of current exemption, Form 1023-EZ non-acceptance, etc.

  2. The Adjustments Unit receives refund requests by hard copy, email, or EEFax. If an EO employee prepares and submits a refund request at case closing, the Adjustments Unit receives the entire case file.

  3. To initiate a refund, an EO employee completes Form 14268, User Fee Refund Request, and attaches an EDS case print.

  4. The Adjustments Unit inputs the user fee refund request based on information the EO employee submitted.

    Note:

    If Form 14268 is not signed by a group manager, return the form to the originating group manager.

  5. The Adjustments Unit maintains:

    • A refund spreadsheet and memo for each refund case

    • A copy of Form 14268 with the attachments

EO User Fee Refund Processing
  1. To input an EO user fee refund request in LINUS:

    1. Open LINUS Refund and click on EO LOOKUP.

    2. Input the EIN to show the user fee.

    3. Click on the arrow next to the DLN that the refund is issued under.

    4. In the ACTION box, click on REFUND.

    5. In the REFUND box, highlight the reason for the refund.

    6. Input the current date.

    7. In the FEE RECEIVED box, input the refund amount.

    8. Hit the split button (LINUS automatically splits the amount).

    9. Click SAVE (refund shows on the refund screen).

    10. Print a copy of the refund screen.

  2. Update the EDS user fee field to reflect the user fee after the refund. Print a copy of the EDS screen showing the updated user fee.

    Example:

    EDS shows an $850 user fee, and the refund is $450; update the user fee field to $400.

  3. After entering 50 refunds in LINUS, input information on a user fee refund spreadsheet using the LINUS prints. Enter the following for each refund:

    • Organization name

    • Address

    • EIN

    • Received date (date of original deposit)

    • Amount paid

    • Amount refunded

  4. Email the completed spreadsheet with a memo to Beckley Finance Center, including the total amount of all refunds to be issued. Email to *CFO BFC Debt Collection Helpdesk. Copy the Adjustments Unit manager on the email.

EP User Fee Refunds

  1. EP specialists initiate:

    • A partial user fee refund when an organization overpays a user fee amount.

    • A full refund because none was required or it accompanied an incomplete determination request.

  2. EP sends refund requests to the Adjustments Unit with the following:

    Item Details
    Form 1725, Routing Slip
    • Plan name

    • Plan number

    • Specialist name

    • Specialist phone number

    • EIN

    • Refund reason

    • Refund amount

    • Group manager’s signature and date

    EP User Fee Refund Request
    • Plan name

    • EIN

    • Refund reason

    • Refund amount with split

    • Specialist’s signature, phone number, and date

    • Group manager’s signature and date

    Form 8717
    • Plan name

    • EIN

    • Plan number

    • Amount paid

    • Application submitted fee schedule

    Form 5300, 5307, or 5310
    • Page 1 of the application showing the DLN and the postmark/received application date

EP User Fee Refund Processing
  1. To input an EP user fee refund request in LINUS:

    1. Open LINUS Refund and click on EP LOOKUP.

    2. Input the EIN to show the user fee.

    3. Click on the arrow next to the DLN that the refund is issued under.

      Caution:

      Look for the plan number or appropriate postmark/received dates if there is more than one plan with the same plan name.

    4. Click VIEW TRANSACTIONS to show the user fees paid.

    5. In the ACTION box, click on REFUND.

    6. In the REFUND box, highlight the reason for the refund.

    7. Input the current date.

    8. In the FEE RECEIVED box, input the refund amount.

    9. Hit the split button (LINUS automatically splits the amount).

    10. Click SAVE (refund shows on the refund screen).

    11. Print a copy of the refund screen.

  2. Update the EDS user fee field to reflect the user fee after the refund. Print a copy of the EDS screen showing the updated user fee.

  3. After entering 50 refunds in LINUS, input information on a user fee refund spreadsheet using the LINUS prints. For each refund, enter:

    • Plan name

    • Address

    • EIN

    • Received date (date of original deposit)

    • Amount paid

    • Amount refunded

  4. Email the completed spreadsheet with a memo to Beckley Finance Center, including the total amount of all refunds to be issued. Email to *CFO BFC Debt Collection Helpdesk. Copy the Adjustments Unit manager on the email.

EP Voluntary Compliance User Fee Refunds

  1. EP Voluntary Compliance (VC) specialists initiate a refund where:

    • An organization submitted an overpayment of the user fee

    • No user fee was required

  2. EP VC specialists enter user fee refund requests in TRAC and email the requests to the Adjustments Unit at *TE/GE-EO-Adjustments with:

    • Form 3210 (with organization’s TRAC control number)

    • Refund Request Form with manager’s signature

    • EP TRAC sheet

EP Voluntary Compliance User Fee Refund Processing
  1. To input an EP user fee refund request in TRAC:

    1. Log on to TRAC.

    2. Then MAPICS/ HQEP.

    3. Click on FORMS.

    4. Click on CINCINNATI USER FEE PROCESSING/HQ-VC User Fee Processing.

    5. Click on QUERY.

    6. Tab to the CTRL NO.

    7. Enter the ctrl # from the MAPICS user fee information sheet.

    8. Click RUN.

    9. Click or tab to the EIN field and enter the EIN from the user fee refund request form.

    10. Click or tab to the REFUND AMT field and enter the refund amount from the ROUTING SLIP MAPICS/HQEP.

    11. Tab to the REFUND DT (date) field and enter the current date (no slashes).

    12. Click SAVE and a box will pop up in the center of the screen that will read: (1) TRANSACTION COMPLETED.

    13. Print screen.

    14. Repeat steps (e) - (m) as necessary.

  2. After completing the TRAC entries, input information on a user fee refund spreadsheet using the TRAC prints. For each refund, enter:

    • Plan name

    • Plan number

    • Address

    • Received date (date of original deposit)

    • Amount paid

    • Amount refunded

    • X in the column titled MAPICS

  3. Email the completed spreadsheet with a memo to Beckley Finance Center, including the total amount of all refunds to be issued to *CFO BFC Debt Collection Helpdesk. Copy the Adjustments Unit manager on the email.

User Fee Indicators

  1. TEDS and EDS list user fee amounts and contain these user fee indicators:

    • Complete (C)

    • Insufficient (I)

    • Overpayment (O)

    • Unknown (U)

  2. TEDS and EDS also contain a dishonored user fee indicator of yes (Y) or no (N).

  3. A case can’t be closed in an approval status with a dishonored user fee indicator of Y or a user fee indicator of I, O, or U.

  4. To correct an indicator, an EO Determinations specialist ensures the appropriate user fee is paid then emails *TE/GE-EO-Adjustments requesting an update to the user fee indicator or dishonored check indicator. The request should include the:

    • Organization’s name

    • EIN

    • EDS case number

    • Appropriate user fee amount

    Note:

    If the required information is missing, respond back to the requestor and ask for the missing information.

  5. The Adjustments employee retrieves the emails from the Adjustments Unit mailbox.

  6. Research LINUS to verify that a payment has been made.

    If Then
    The payment isn’t on LINUS Research IDRS for payment information using command codes such as BMFOLI, BMFOLT, URINQ, and TAXMOD. Complete a money transfer if a payment is located. See IRM 7.21.2.4.
    This payment isn’t located on IDRS Email the specialist to ask the organization for a copy of the cancelled check (front and back).
    The payment is on LINUS, but the payment is dishonored Email the specialist to request a new user fee payment (if not already requested).
    The payment is verified in LINUS or IDRS Update the indicator in TEDS only if TEDS owns the case file or EDS if case owned by EDS.
  7. To update the user fee or dishonored payment, incomplete payment, or overpayment indicator in TEDS:

    1. Log into TEDS.

    2. Left click on the word Advanced. A search screen will populate for you to input your information.

    3. Enter the EIN in the third blank with the dash (-) in the Properties column and hit search.

    4. Locate the correct case file. (All case files under that EIN will populate.)

    5. Right click on the blue dot and a drop down menu will appear.

    6. Choose Change Case from the drop down menu and another drop down menu will appear.

    7. Click on the error and select Modify User Fee Information and hit Ok.

    8. Locate the User Fee Indicator box and remove the check mark.

    9. Locate the Payment Status box and a drop down menu will appear.

    10. Click on the arrow and select the letter C which will mark the user fee payment status as Correct and select Ok.

      Note:

      The update will automatically roll to EDS within 15 minutes of the update.

    11. Email the specialist that the request has been completed and move the email to the completed folder.

  8. To update the user fee or dishonored check indicator in EDS:

    1. Enter option (4) Update Status, Master Record or Closing Data on the UPDATE MASTER RECORD - EXEMPT ORGANIZATION screen.

    2. Enter case identifier to access the case EDS data and hit F1.

    3. Update the Dishonored Check Indicator field (N), as needed and hit F1.

      Note:

      If two separate payments were received, update the amount to the amount that was not dishonored. If one payment was received and dishonored, zero out the entire payment. Hit enter until you come to the Dishonored Check indicator. Enter N if the fee was not dishonored and enter Y if it was dishonored.

    4. Update the User Fee Payment Status. If the fee wasn’t dishonored and you are updating with the correct fee, enter C. If the fee was dishonored, enter Y and hit F1.

    5. Email the specialist that the request has been completed or that the payment was dishonored and move the email to the completed folder.

Duplicate Flag Error in TEDS

  1. This is a TEDS indicator to alert the specialist that there is more than one case file in TEDS under an EIN and the specialist should confirm there are not multiple open or closed (a prior approval) cases. If the box is marked it will prevent the agent from closing the case file in TEDS.

  2. To correct the error so the case can be closed:

    1. Log into TEDS.

    2. Left click on the word Advanced. A search screen will populate for you to input your information.

    3. Enter the EIN in the third blank with the dash (-) in the Properties column and hit search.

    4. Right click on the blue dot and a drop down menu will appear.

    5. Left click on the blue dot and click on General Case Info.

    6. Scroll down and locate Potential Duplicate Flag. The box located next to it will have a check mark. Click on the box and remove the check mark. Hit Ok.

    7. Email the specialist that the request has been completed and move the email to the completed folder.

Updating Entity Information in LINUS

  1. LINUS entity information consists of the applicant name, EIN, and address. Requests to update information are sent by EP/EO specialists, tax examiners, secretaries, and clerical support.

  2. To make an update:

    1. Log into LINUS editor.

    2. Enter your 5 digit TE number and press return.

    3. Click on Edit EIN or Entity box and the EIN Edit screen will populate.

    4. Input the EIN without the dash in the EIN box and press enter. The entity information will populate. Review the data and determine it is the correct case file.

    5. If correcting the EIN in the Enter Valid EIN lines in the box, input the correct EIN and enter EIN to confirm the EIN. Hit enter. A dialog box will populate for you to confirm that you want to update the EIN. Click Ok to update the EIN.

    Note:

    To confirm any updates made to the LINUS account, long into LINUS Research and enter the EIN without the dash and review all updates. If the account updated, you can close LINUS. If the data you entered did not update, repeat the steps above. Make sure the information in LINUS matches TEDS/EDS.